Restaurant Business ITR - Section 269ST Cash Limits, Section 9(5) CGST Aggregator Reconciliation, and Composition versus Regular GST Decision
📌 TL;DR - ITR for Restaurants Services at a Glance
TL;DR: Restaurants file ITR-3 (proprietor), ITR-4 (presumptive Sec 44AD up to Rs 2 crore, Rs 3 crore digital), ITR-5 (LLP/firm), or ITR-6 (Pvt Ltd). Tax audit applies above Rs 1 crore (Rs 10 crore if 95 percent non-cash). Cash receipts from one customer over Rs 2 lakh in a day attract 100 percent penalty under Section 271DA. Swiggy and Zomato pay 5 percent GST under Section 9(5) CGST since 1 January 2022. Audit-case ITR due 31 October 2026.
| Parameter | Detail |
|---|---|
| Governing Acts | Income-tax Act 1961 (Sec 32, 44AB, 44AD, 269ST, 271DA, 139(1), 234A/B/C, 234F, 270A, 271B); CGST Act 2017 (Sec 9(5), Sec 10 composition, Sec 15(2)(c) service charge, Sec 25 multi-state, Schedule I deemed supply); FSS Act 2006 (FSSAI licensing); ICDS-II Inventories |
| Applicable To | Dine-in restaurants, cafes, QSRs, fine-dining, cloud kitchens, food trucks, catering, banquet halls, food courts, multi-outlet chains, hotel restaurants (specified premises 18 percent ITC), HUF dhabas, partnership / LLP / Pvt Ltd / listed entities |
| Section 269ST Cash Receipt Limit | Rs 2,00,000 from one person in a single day, single transaction, or for one event. Section 271DA penalty equal to 100 percent of the cash received - imposed by Joint Commissioner. Banquet and catering bookings are common traps |
| Section 9(5) CGST Aggregator Treatment | From 1 January 2022 (Notification 17/2021-CT(R) dated 18 November 2021), e-commerce operators (Swiggy, Zomato) pay 5 percent GST on restaurant supplies through their platform. Restaurant does NOT include these supplies in GSTR-1 outward but reconciles gross orders, ECO commission, and net payouts in books and Schedule BP |
| GST Composition Scheme | 5 percent on turnover up to Rs 1.5 crore (Rs 75 lakh in special category states) under Section 10 CGST Act 2017, no ITC. Quarterly CMP-08, annual GSTR-4. Election impact on ITR profit modelled over five-year horizon |
| Section 32 Depreciation Rates | Plant and machinery (commercial ovens, fryers, refrigerators) 15 percent WDV; furniture and fittings 10 percent; hotel building 10 percent; POS / computers 40 percent. Half-rate (50 percent of normal) if put to use less than 180 days in the year |
| Tax Audit Threshold | Rs 1 crore turnover (Rs 10 crore if 95 percent receipts and payments non-cash). Form 3CA-3CD or 3CB-3CD due 30 September 2026. Section 271B penalty 0.5 percent of turnover or Rs 1.5 lakh whichever lower |
| Cost | Starting Rs 7,500 (Excl. GST and Govt. Charges) |
| Form / Portal | ITR-3 / ITR-4 / ITR-5 / ITR-6 on incometax.gov.in; HSN/SAC 9963 for restaurant services; Form 26Q TDS quarterly |
| Authority | CBDT (Income-tax Act); CBIC (GST); FSSAI (food safety - FSS Act 2006); CCPA (consumer protection - service charge guidelines) |
All fees and charges listed are indicative only and do not constitute a binding offer. Final amounts may vary depending on the volume of work and the complexity involved.
Restaurants in India sit at the centre of three regulators: CBDT for income tax, CBIC for GST, and FSSAI for food safety. Filing an income tax return for a restaurant, cafe, or cloud kitchen is therefore not a routine exercise. The choice between the GST composition scheme (5 percent without ITC) versus regular registration (5 percent without ITC or 18 percent with ITC for specified premises), the Section 269ST cash receipt limit of Rs 2 lakh per customer per day, kitchen equipment depreciation under Section 32, and Section 9(5) CGST treatment of Swiggy / Zomato orders all interact in the same return.
Banquet bookings, large parties, and bulk catering orders frequently breach Rs 2 lakh in cash from one customer for one event - triggering Section 271DA penalty equal to 100 percent of the cash received imposed by the Joint Commissioner. Multi-outlet chains across multiple states need separate state GSTINs (under Section 25 CGST Act) but file ONE income tax return at the PAN level - branch transfers are deemed supplies under Schedule I. Tip pass-through to staff is not restaurant revenue but service charge added to bills is, per Section 15(2)(c) CGST Act. Patron Accounting has filed ITR for 100+ restaurants, cafes, and cloud kitchens across Pune, Mumbai, Delhi, and Gurugram.
Content is reviewed quarterly for accuracy.